Overview

Mexico is a vast country with an average of 38 percent of upper and middle classes. The Mexican middle class has grown significantly since NAFTA, and U.S. consumer patterns and trends have been meaningful throughout the years.

As a result, U.S. brands and multinational companies such as H&M, Petco, Walmart, SAMS Club, Costco, and many others have a strong presence in the country. Despite these characteristics, the pandemic has put a lot of pressure especially on the middle class. The Mexican government has not provided sufficient support to many small and medium sized businesses that support this economic/population sector. Consequently, consumers have become more cautious with their purchases, prioritizing on essential/natural food, education, health products and specific home products.

While the retail and consumer goods sector is getting stronger and likely to grow post COVID, most goods, including those sold in U.S. subsidiaries in Mexico such as Walmart, are often made in China and have a lower price point than those items that may come from the U.S. or other Western manufacturers.

The Retail Sector Post-COVID

As in many other sectors, COVID-19 has brought many changes in lifestyles, consumer patterns and economic power. In 2020, the world became more technology-dependent and Mexico was no exception. In the area of eCommerce, the country grew in one year the equivalent of five years of constant growth.

Although Mexican consumers have been price conscious, they have purchased products in a hybrid mode, going to the supermarkets and malls but also through eCommerce platforms like Amazon, Mercado Libre, Walmart.com and Alibaba. Mexican consumers are more cautious, demanding, concerned about their health, safety, economy, and environmental protection. In 2022, the Mexican consumer prioritizes food, medicines, and health products, choosing socially responsible brands that are adopting environmentally sustainable initiatives.

Opportunities

• Natural and organic food produced and bought locally
• Health and beauty products
• Consumer electronics: TV screens, tablets, computers, printers, smart phones
• Household goods, housewares, and appliances
• Furniture for home-office
• Indoors work-out equipment
• Cleaning and sanitization products
• Toys, games, and videogames
• Arts and crafts
• Musical instruments.

Market Entry/Distribution Channels

U.S. products can be imported into Mexico by a Mexican business partner/importer or directly from the retail chains and department stores.

Key retail chains and department stores are among the largest importers and wholesalers, and are organized as follows:

• Department Stores: Liverpool, El Palacio de Hierro and Sears
• Supercenters: Walmart, HEB, Soriana, Comercial Mexicana and Chedraui
• Wholesale Membership Stores: Sam’s Club and Costco
• Convenience Stores: 7 Eleven, Oxxo, Extra
• Specialized retail: City Market, Deportes Marti, Bed, Bath and Beyond, +Kota, Petco, The Home Depot.

Cosmetics and personal care products

Cosmetics and personal care products represent an important sub-sector of consumer goods in Mexico. Mexico is ranked in the top 10 markets in the world for cosmetics and personal care products, and it continues to be the second-largest market for beauty products in Latin America. Current market conditions, such as the lingering effects of the COVID-19 pandemic and high inflation, not seen in over 20 years, have resulted in lagging growth and very conservative economic forecasts. Instead of an eight percent annual growth rate trend, statistics show the impact of the pandemic was so severe that imports of cosmetic and personal care products saw an overall contraction of over 3 percent in the last two years. The situation is slowly turning around and as the World starts returning to prepandemic (2019) activity levels, so is the expectation for the future growth of the cosmetic and personal care products market in Mexico.

U.S. beauty and personal care products exporters will find not only American brands sold in Mexico, but heavy competition from European (French, Italian, German, and British) brands and increasingly Asian brands. The Korean beauty rage has also arrived in Mexico and imports from that country grew in 2021 more than any other. Nevertheless, the United States remains the leading country of origin for imports of beauty products into Mexico.

*Total market size = (total local production + imports) – exports)
Sources: Mexican Secretariat of Economy (SE), Mexican Institute of Statistics and Geography (INEGI), and Mexican National Chamber of the Cosmetics Industry (CANIPEC).

Opportunities

Emerging niche sectors represent the best opportunities for growth, without having to compete fiercely with multinational companies that dominate the mainstream market and spend considerable sums on marketing. Since the Mexican beauty sector is not a global trendsetter, niches that are more developed in the United States are in their early stages in Mexico and provide an opportunity for suppliers to pioneer in this arena.

Men’s care products, especially beard brooming products are a growing category, but the market size is still very small. Organic and natural products have strong potential due to the international trends towards environmentally-friendly products, as well as a concern about harsh chemicals and their effects on the body. The challenge for the U.S. exporter is to compete with locally-made products benefitting from considerably lower freight costs. Still, U.S.-made organic and natural products have a good reputation with the segment of the population that can afford imported products.

Market Entry

Regulation of imported cosmetics and personal care products is not cumbersome if no miracle nor therapeutical claims are made and, in most cases, only require labeling compliance as outlined in NOM-141-SSA1/SCFI-2012. NOM 141 is a technical regulation that specifies the information that must be provided in Spanish to inform the consumer about the product’s function and use. Before exporting to Mexico, it is important to work with a Mexican importer of record to review the specific requirements that the product might have and ensure the products are compliant with all applicable Mexican standards.

It is important to note that in the natural product sub-sector there is great uncertainty and expectation regarding the import of personal care products containing cannabidiol (CBD) oil. Marijuana– and hemp–derived products containing specified amounts of the chemical compound THC remain illegal under U.S. federal law, including the transport of those products over state and international borders. However, a 2018 directive from the U.S. Drug Enforcement Administration may signal an evolving approach towards regulation of these products.

There is great uncertainty and expectation regarding the import of personal care products containing cannabidiol (CBD oil). On June 28, 2021, Mexico’s Supreme Court resolved that the General Health Law´s blanket prohibition on the recreational use of cannabis and THC was unconstitutional. Although the Supreme Court’s resolution is a significant step, uncertainty still remains among the industry in general if regulations for personal recreational use and for other uses of cannabis such as industrial, cosmetic, or nutritional, are not promptly in place. The situation remains the same as of June 2022, with no clear regulation on the process for importing and commercializing CBD products for personal care. In other words, it is not illegal, but it is unclear how to successfully import these products. It is still necessary to obtain permits from COFEPRIS which makes the process cumbersome and time consuming, and response times are lengthy.

Finally, the COVID-19 pandemic has spurred development of eCommerce in Mexico for both cosmetics and personal care products. This has evolved to become an essential sales channel, and several distributors and retailers quickly launched or expanded their online presence due to social distancing measures. It is important to note that U.S. exporters cannot sell directly to the Mexican consumer through this channel in compliance with standards, customs, and labeling regulations. Although many products can be imported into Mexico without the use of a customs broker for shipments under USD 2,500, personal care products belong to a category called difficult identification. All products that are in liquid, cream, gel, or powder form cannot enter freely. Thus, for online sales, the U.S. exporter will still need a Mexican importer of record to facilitate the import process and labeling compliance. Please contact the U.S. Commercial Service if you need assistance in finding such a parter in Mexico.

Resources

Mexican Chemical Society (SQM)                                                           

Federal Commission for the Prevention of Sanitary Risks (COFEPRIS)     

Mexican Institute of Statistics and Geography (INEGI)                

Mexican National Chamber of the Cosmetics Industry (CANIPEC)             

Association for the Cannabis Industry in Mexico (ANICANN)   

Deloitte Mexico City                                                                                     

Gente como Uno Mexico                                                                             

Euromonitor International                                                                       

Events

• EBS, Expo Beauty Show, October 23-25, 2022, Mexico City
• The Mexican Healthy Products Summit, January 26-28, 2023, Puerto Vallarta, Jalisco
• Expo Spa, May 27-29, 2023, Mexico City
• EBIO, Expo Belleza Internacional de Occidente, June 4-5, 2023, Guadalajara, Jalisco
• Expo Antad y Expo Alimentaria México, May 2023, Guadalajara, Jalisco, Mexico
• Expo Decostylo, Decoración y Regalo 2023
• Habitat Expo 2023

Contacts

For more information on the retail and consumer goods sector in Mexico, please contact:

Alejandra Calderón

Commercial Assistant

U.S. Commercial Service-Mexico City

Tel:+52 (55) 50-80-2000 ext. 5208

alejandra.calderon@trade.gov

For more information on the cosmetics sector in Mexico, please contact:

Yazmín Rojas

Commercial Specialist

U.S. Commercial Service—Monterrey

Tel.: +52 (81) 8047-3290

Yazmin.Rojas@trade.gov